India's Cash Transfer Program to Help 720M Needy People

The Indian government is starting in January a new cash transfer program to help its poorest citizens, with the hopes of reducing wide-scale corruption and making sure those who need the resources the most get them.

"Direct cash transfers, which are now becoming possible through the innovative use of technology and the spread of modern banking across the country, open the doors for eliminating waste, cutting down leakages and targeting beneficiaries better," said Indian Prime Minister Manmohan Singh.

The ambitious project is estimated to provide 40,000 rupees ($720 U.S. dollars) a year to poor households, which could make a big difference for a lot of people and help them get the food, animals and supplies they need to lift themselves out of poverty. The Wall Street Journal noted that the resources are expected to reach around 720 million people, and anyone who lives below or just above the national poverty line can qualify.

The centralized government has tried to help its poorest citizens before, but cash flow has often been directed toward local councils, where corruption and mismanagement has stopped it from going out to those that need it the most. By giving the money to the individuals directly, the government hopes that its welfare program, which amounts to $71.9 billion a year, will be more effective.

The program, which was discussed earlier this week by the Prime Minister Singh and other ministers and bureaucrats, will start at the turn of the new year, and is projected to cover 18 states by April, and hopefully the entire country by Dec. 2013.

At first, only programs such as scholarships and healthcare will be covered, but gradually the money will be extended to provide for food, fertilizer and cooking gas.

Many have hailed this development, as it will allow those in need to choose how to spend the welfare money and decide in which household areas they need the most help.

"We are already bearing subsidies on welfare schemes be it for food, fertilizer, education or oil. Through the new way of cash transfer, we will eliminate middlemen, check leakages and ensure the actual beneficiaries are benefited," an unnamed senior official from the Prime Minister's office told The Wall Street Journal.

The publication identifies Brazil as having one of the world's most successful cash transfer programs, which has significantly helped reduce poverty levels over the past decade. Other countries that use similar welfare programs included the Philippines, Turkey, Chile, Mexico, Indonesia and South Africa.